Question

Show the accounting equation on the basis of the following transactions and also show the Balance Sheet:
(i) Started business with Cash ₹ 60,000 and Goods ₹ 30,000.
(ii) Purchased goods for Cash ₹ 40,000 and on Credit ₹ 25,000.
(iii) Goods costing ₹ 48,000 sold at a profit of 33$\frac{1}{3}$%. Three-fourth payment received in Cash
(iv) Goods costing ₹ 20,000 sold at a loss of 5%, out of which ₹ 12,000 received in Cash.
(v) Paid Rent ₹ 4,000 and Salary ₹ 6,000.
(vi) Received Cash from Debtors ₹ 15,000.
(vii) Paid telephone bill amounting to ₹ 800.

Answer 1

ACCOUNTING EQUATION
S. No.	Transaction	Assets					=	Liabilities	+	Capital
		Cash	+	Stock	+	Debtors	=	Creditors
(i)	Started business with cash and goods	+60,000		+30,000						+90,000
		60,000	+	30,000			=			90,000
(ii)	Purchased goods for cash and credit	–40,000		+65,000				+25,000
		20,000	+	95,000			=	25,000	+	90,000
(iii)	Goods costing Rs 48,000 sold at a profit of $33\frac{1}{3}\%$. 3/4th payment received in cash	+48,000		–48,000		+16,000				+16,000
		68,000	+	47,000	+	16,000	=	25,000	+	1,06,000
(iv)	Goods costing Rs 20,000 sold at a loss of 5% out of which Rs 12,000 were received in cash	+12,000		–20,000		+7,000				–1,000 (Loss)
		80,000	+	27,000	+	23,000	=	25,000	+	1,05,000
(v)	Paid rent and salary	–10,000								–10,000 (Expense)
		70,000	+	27,000	+	23,000	=	25,000	+	95,000
(vi)	Received cash from debtors	+15,000				–15,000
		85,000	+	27,000	+	8,000	=	25,000	+	95,000
(vii)	Paid telephone bill	–800								–800 (Expense)
		84,200	+	27,000	+	8,000	=	25,000	+	94,200

Working Note:

WN1 Calculation of Selling Price

WN2 Calculation of Selling Price

Balance Sheet as on ……
Liabilities	Amount (Rs)	Assets	Amount (Rs)
Creditors	25,000	Cash	84,200
Capital	94,200	Stock	27,000
		Debtors	8,000
	1,19,200		1,19,200